ZBS joins interest rates hiking squad

THE Zimbabwe Building Society (ZBS) this week followed on the footsteps of the Central African Building Society (Cabs) by also hiking mortgage loan rates.

“Verdana, Arial, Helvetica, sans-serif”>Last week, in a written response, ZBS confirmed proposals to increase mortgage rates were being considered but would be published at “an appropriate time”.

“Interest rates are periodically reviewed and increased where necessary, taking into account market fundamentals and the society’s cost and income ratios,” ZBS said.

“Current interest rates in the market place have increased considerably due to the increase in cost of funds. This is as a result of the current hyperinflationary environment where all costs are rising everyday. ZBS has not been spared in this respect.”

On Tuesday ZBS told customers that it was increasing mortgage interest rates on existing bonds with effect from today.

The building society said for low and high-density owner-occupied properties the rate was being hiked from 37,50% to 47,50%.

The rate for low and high-density non-owner occupied properties rates shot up from 45% to 55%.

Commercial and industrial property owners will now pay 60% up from the 47,50% previously.

Rates for the United States Agency for International Development (USAid) high-density owner-occupied property rates skyrocket from 19,90% to 25,50% after today’s ZBS hike.

The building society has however defended its decision to increase rates coming at a time when Zimbabwe’s banking sector is facing a serious cash crisis.

“The property sector is currently vibrant,” ZBS said. “The demand for property continues to drive property prices upwards, making property a good investment for those able to afford to invest in it.”

Indeed this is true as companies listed on the Zimbabwe Stock Exchange are now venturing into property, saying this is designed to enable them to hedge against spiraling inflation.

The inflation figure for June stood at 364,5% but analysts say it will soar and surpass the 500% mark by year-end, further sending prices ballooning.

Other ZBS services which went up this week include rates for religious and charitable organisations whose fee stands at 43%, sports clubs (60%), refinance (65%), working capital finance (55%), and short-term loans (65%).

The building society said it was still granting mortgage loans to customers subject to the availability of funds.

Last week Cabs told shareholders that it was increasing rates effective today.

Cabs managing director David Stephenson said for customers seeking working, commercial, and industrial capital amounting to $100 million rates would change from 45% to 53%.

From the current mortgage rate of 42% schools would now pay 47%.

Vacant land which attracted a fee of 45% would now fetch 53% interest, while non-trading company and trust residential areas would attract a fee of 45% up from 42% previously.

Stephenson said non-owner occupied residential properties would attract an interest of 45% from the 42% charged previously, while owner-occupied low and high density properties worth $20 million would attract a fee of 43% up from 37%.